The International Auditing and Assurance Standards Board^® (IAASB^®) today released International Standard on Auditing^TM (ISA^TM) 720 (Revised), The Auditor’s Responsibilities Relating to Other Information. The revisions aim to clarify and increase the auditor’s involvement with “other information”—defined in the standard as financial and non-financial information, other than the audited financial statements, that is included in entities’ annual reports.

“The annual report is a critical document for investors. It is in the public interest that an auditor undertakes an ‘intelligent read’ of an annual report, in the context of the  knowledge obtained in the audit, and perform certain procedures to ensure the annual report is not materially inconsistent with the audited financial statements,” explained Prof. Arnold Schilder, IAASB Chairman.

The standard also includes new requirements related to auditor reporting on other information that complement the changes arising from the IAASB’s new and revised Auditor Reporting standards, issued earlier this year. Concurrent with those standards, ISA 720 (Revised) will be effective for audits of financial statements for periods ending on or after December 15, 2016.  

“Which documents have been read and considered by the auditor and the results of the auditor’s work on those documents will now be transparent to auditor report users,” explained Kathleen Healy, IAASB Technical Director. “Specifically articulating the auditor’s responsibilities for other information, including the fact that the auditor’s opinion does not cover this information, will also give users the appropriate context in which to consider an entity’s annual report.” The standard also seeks to address the practical challenges that may arise when some or all of the other information is not available as of the date of the auditor’s report, and prescribes additional communications in auditor’s reports for listed entities in these circumstances.

The staff-prepared Basis for Conclusions, which explains the IAASB’s rationale for its decisions, and an At a Glance document, which explains the main changes from the extant ISA, are also now available.

About the International Auditing and Assurance Standards Board
The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants^® (IFAC^®).

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The International Ethics Standards Board for Accountants^® (IESBA^®, the Ethics Board) today released Changes to the Code Addressing Certain Non-Assurance Services Provisions for Audit and Assurance Clients. The changes enhance the independence provisions in the Code of Ethics for Professional Accountants™ (the Code) by, in particular, no longer permitting auditors to provide certain prohibited non-assurance services to public interest entity (PIE) audit clients in emergency situations, and ensuring that they do not assume management responsibility when providing non-assurance services to audit clients.

“Auditor independence is foundational to public trust in the external audit,” said IESBA Chairman Dr. Stavros Thomadakis. “These enhancements will not only further reinforce independence but also promote greater consistency of application of the Code’s provisions in the 100-plus jurisdictions around the world where the Code is currently in use.”

The revisions include the removal of provisions that permitted an audit firm to provide certain bookkeeping and taxation services to PIE audit clients in emergency situations, as these were susceptible to being interpreted too generally. In addition, the revised provisions include:

• New and clarified guidance regarding what constitutes management responsibility; and
• Clarified guidance regarding the concept of “routine or mechanical” services relating to the preparation of accounting records and financial statements for audit clients that are not PIEs.

The revisions also include corresponding changes to the Code’s non-assurance services provisions with respect to other assurance clients.

“These changes focus on a few select, but important, areas of the Code. Nonetheless, the board continues to explore other areas where there may be a need for further enhancement,” noted IESBA Technical Director Ken Siong. “In this regard, the board has recently launched a new project that will review the clarity, appropriateness, and effectiveness of the safeguards against threats to auditor independence in the Code, particularly as these relate to the provision of non-assurance services to audit clients.”

To access the revised pronouncement, visit the IESBA website: www.ethicsboard.org. The changes will be effective April 15, 2016, with early adoption permitted. See the final pronouncement for details.

About the IESBA
The International Ethics Standards Board for Accountants (IESBA) is an independent standard-setting board that develops and issues, in the public interest, high-quality ethical standards and other pronouncements for professional accountants worldwide. Through its activities, the IESBA develops the Code of Ethics for Professional Accountants, which establishes ethical requirements for professional accountants. The structures and processes that support the operations of the IESBA are facilitated by IFAC. Please visit www.ethicsboard.org for more information.

About IFAC
The International Federation of Accountants^® (IFAC^®) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

The revised ISA aims to clarify and increase the auditor’s involvement with “other information”—defined in the standard as financial and non-financial information, other than the audited financial statements, that is included in entities’ annual reports.